You are the Chief Investment Officer of the Kaufland Hypermarket Chain and has identified Malaysia as the next country to investment. Answer the following with specific reference to your business plan. 1) Assuming the investment in Malaysia in fully funded by equity, provide an estimation for the investment’s discount rate. Show the calculation by taking appropriate assumptions. 2) Based on the exchange rate of home currency and Ringgit Malaysia for 2016-2020, explain the risk of transaction exposure and translation exposure. 3) Assuming your business operation commences in June 2021 and Ringgit Malaysia is softening against the home currency throughout the year. Examine the impact and propose a hedging strategy using: i. currency option. ii. currency futures.

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You are the Chief Investment Officer of the Kaufland Hypermarket Chain and has identified Malaysia as the next country to investment. Answer the following with specific reference to your business plan.

1) Assuming the investment in Malaysia in fully funded by equity, provide an estimation for the investment’s discount rate. Show the calculation by taking appropriate assumptions.

2) Based on the exchange rate of home currency and Ringgit Malaysia for 2016-2020, explain the risk of transaction exposure and translation exposure.

3) Assuming your business operation commences in June 2021 and Ringgit Malaysia is softening against the home currency throughout the year. Examine the impact and propose a hedging strategy using:

i. currency option.

ii. currency futures.

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